The scoop on Cisco’s resurgence in collaboration and its long range plans for IoT

Rowan Trollope was hired four years ago to breathe new life into Cisco’s collaboration group, the results of which are partially on display with new capabilities coming out in Apple’s release of iOS 10. In fact, he did so well with collaboration he was also given responsibility for Cisco’s Internet of Things efforts. Network World Editor in Chief John Dix recently caught up with Trollope, who is senior vice president and general manager, IoT and Applications, to see how he managed the collaboration turnaround and what he has planned for IoT.

Rowan Trollope, Cisco Senior Vice President and General Manager, IoT and Applications

What made you a good fit to head up Cisco’s collaboration group?

When I joined I was like, “Guys, I don’t know anything about voice-over-IP or any of this technology stack and I don’t know that I’m the right guy.” What I was known for at the time was being a design oriented tech leader who understands user experience and design. If you go back in my history, I was a software developer who built the frontends and made them beautiful and easy to use and simple. When I lived in Hollywood I owned an art gallery and I was really involved in things outside of tech, not just tech, tech, tech all the time. I come from a family of artists and so bringing that sensibility to technology has been what I’ve always been about.

Roughly 75% of my background was building consumer technology, about 25% on the enterprise side. What I had been doing for most of my career was bringing that consumer sensibility into the enterprise technology stack and moving it from ugly, nasty stuff to beautiful, smooth, exciting technologies that users in business really want to use. My thesis for coming to Cisco was, “You guys are the market leaders in this technology, but almost no one has access to it. Let’s reinvigorate the technology and bring it to a whole new level and put business communication technology at the forefront of the technology evolution.”

You joined Cisco in mid-2012 when, as I understand it, the company’s collaboration business had suffered 10 consecutive quarters of flat or declining revenue. Describe what you found when you arrived.

Nothing was going well. I think in the second week on the job a news story came out saying Cisco was going to sell the business. That was the environment I came into and there had been a revolving door of leaders – four that had been blown out successively.

I spent the first few weeks digging into the technology and quickly realized there were some real gems, like our telepresence business, that had been mishandled, and that we were thinking wrong about things like the voice and telephony business. I jumped in and started figuring that out and I set the expectation with the executives that this was going to be a multi-year effort.

One thing I realized pretty quickly was we would need a cloud infrastructure to power everything we were going to do. In fact, I could even tell you the moment I realized it. I had called my executive assistant and said I needed to have meetings with my direct reports and asked her to schedule the flights and block out my calendar because I figured it would be two weeks flying around the world. She says, “Everybody here does videoconferencing.” I said, “Well, I’ve tried that before, the quality is no good and I don’t think that’s a good idea for the first meetings.” She said, “No, trust me, you should do it this way.”

So I said OK. They shipped a Cisco videoconferencing device to my house and an IT guy to set it up. I sent him away and said I’ll figure this out on my own, and pretty quickly discovered the stuff was really hard to set up. But once I did the experience was mind-blowing. The contrast between the setup and the experience couldn’t have been more stark.

The entire day I had these amazing quality calls using a device Cisco had dropped on my desk that looked like a monitor, and this was on my home Comcast Internet link, not some special underground private Cisco network. I sat back at the end of the day and said, “Holy crap, I could make a huge dent in the world if I could bring the experience I just had to every other knowledge worker in the world. That’s all I have to do.”

Funnily, just then, while I’m reflecting almost in awe, my neighbor comes into my converted garage and says, “What is that thing?” I told him and I made a test call and he was totally blown away and asks how much it cost. I said that’s a good question, so I went online and found out the price was $14,400. I thought it was a mistake at first, but I told him, “They’re not really designed for your company,” because he runs a small business with 24 people.

But that was the beginning of the strategy.

I thought, OK, you don’t have to be a genius to figure this out. You just had an incredible experience using the products in your new portfolio. How do you make it more accessible and easier to set up and more affordable?

What if, instead of being $14,400, it was $1,400, and what if instead of having an IT guy come set it up it was an out-of-the-box setup with three steps that anyone could do, including a totally nontechnical person? What if there was no infrastructure required to host it, it was just all in the cloud just like Skype? So that was the first vision.

The direction was set right away. We’re going to refresh all of our video endpoints and we’re going to drive the price down by 10 times. That wasn’t in the DNA of Cisco at the time. The DNA at Cisco was gold-plated hardware with great margins. That’s good, but I would rather make the same dollars and have 10 times the units out there and one-tenth the margin.

So that’s what we did. The next version of that same desktop device was priced at $1,400 and we started blowing them out into the marketplace, and we built a cloud service to power it. The cloud service took two years to get to scale, and just this year it’s actually getting fully globally deployed.

Couldn’t you just piggyback on an existing cloud service?

It turns out there was no SaaS service in the cloud for real-time communications. It just didn’t exist. When we built it, we decided we we’re going to make it open because other companies had built global video networks but they were closed. You couldn’t go to Skype and go, “Can I build this thing and have it connect to your network?” No one had a network we could connect to, so we built our own.

Of course, we’re Cisco so we could get all the gear at cost and spend tons of CapEx to get it done and globally deployed. And we actually finally got that done. We launched it as Spark and that’s the infrastructure we’re having this phone call on, as a matter of fact. All the audio is going through our servers, which are also supporting video. And it’s open so people can develop software and build their own communications apps.

I was inspired by Jeff Bezos on this one. When they built AWS, he said every API that you consume has to be publicly available. It has to be done in a way that can be publicly consumed. We did the same thing with Spark.

The phone I’m using right now is using RESTful cloud APIs that any software developer can use. In fact, just last night I saw a team of six people who built this incredible new communications device that’s entirely on our cloud infrastructure using these new APIs. That’s totally changed the game versus the legacy of telephony, which is a closed system.

Once I realized we were going to need this radical cloud infrastructure, I asked, “How do I get it?” My very first hire was the CTO from Skype, Jonathon Rosenberg. He’s awesome. Jonathan and I have been partners in crime for the last three years building this whole thing out. This year is pivotal as we transition the business completely to this cloud infrastructure and it’s just going to open up all kinds of new opportunities for us.

Meanwhile, we had to run the business as it existed. But we were pretty shrewd. We had to reallocate a bunch of money to go build the cloud infrastructure. We had a billion-dollar budget and we reallocated $300 million and started building the cloud, and then I hired new leaders and got fresh thinking on the existing products.

Another thing I did to get the businesses to grow was decided we didn’t need as many products. We had 65 hardware video systems. We reduced the portfolio of endpoints to 15 SKUs, and that let us do those things a lot better. We’ve won all kinds of awards for hardware designs.

So you started with video and then turned your attention to the other pieces of the Cisco collaboration portfolio?

Video is where I saw the most immediate opportunity, then we turned our attention to voice. If you look at the collaboration business, it breaks down into four buckets: There’s voice, which is roughly $2 billion, then you’ve got web conferencing which is a billion, and videoconferencing which is a billion.

And really, the strategy I described for videoconferencing applies to all of it -- more resources on fewer things, do them better, pay attention to the user experience, and drive the price down. When we did that for video the business took off. It was up 67% the first year after the new products were released.

But it was also about inspiring the teams about what was possible. I’m not an expert in any of this stuff. But I know that it is inevitable that every room is going to have technology and every person is going to expect these modern tools every time they have a conversation. So this is actually a really big business. It’s not something we’re just trying to manage for margins.

So with this voice business, we need to stop thinking about how we sell another billion dollars’ worth of phones this year. We need to actually come to grips with the fact that the mobile phone might replace the desk phone and, if that happens, where are we going to be?

I spent weeks in the first year asking the question, “What is the future of the desk phone?” I even ran a thought experiment with the leaders. I said, “If you took the executive leadership team at Apple and plopped them in to run the Cisco Collaboration business, what would they do?” They would say, “Well, we just made personal communications awesome. Now we’ll do the same thing for business.”

By the way, I’m a total nerd. I have hardware in my office and I still write code on the weekends.

What does that mean? Mobile phones are obviously the future, why are we still doing desk phones? Maybe we should do something different there. That was actually the impetus behind the Apple partnership.

We went to Apple and said, “Hey, we want to make the iPhone an incredible desk phone, which it isn’t today. It doesn’t do all the things your desk phone can do. There are things we could do to make it better for businesses, and there are things that are preventing businesses from using their mobile phones for a whole host of reasons.”

So boom, we started off on that process and that’s what led to a host of integrations in iOS 10. We co-developed iOS with Apple to be able to be a native business communications client. That was one way of thinking about that business differently.

And when we started telling customers, low and behold, they started going, “Yes, that’s what we want. We want our iPhones to work awesome when we come into our offices. If you could do that, we’re on board.”

Have you focused some of that design effort on the traditional VoIP deskset as well?

On the phone side we did the same thing. We dramatically reduced the number of products and redesigned them. I took it to the best designers we have in Scandinavia and had them redesign the hardware. And we redesigned the operating system to be cloud native. They upgrade their operating system just like iOS does.

I viewed the desk phone to be just another mobile phone. Why is it different? Why can’t you run apps on it? Why can’t it do all those things? Why can’t it just seamlessly be part of your experience? That’s what you see with our new phones, a totally different experience.

For example, this voice over IP phone sitting at my desk here at home is connected via Wi-Fi and linked to my calendar through our cloud. It knew I was supposed to be in this meeting and it knew what the number was and it knew how to connect the audio. I hit one button and boom, I was connected to the audio. For most people, a conference call like this is a 10-digit number plus an eight-digit PIN plus a password and you get that wrong four times, etc.

People hate joining meetings because of all that rigmarole. We dove deep on that. We said, “What if we eliminated the pain of joining meetings? What if we made a product that totally transformed that?” That’s what we’ve been doing. You work from the experience you want back to the technologies you need to deliver that experience. We can’t wake you up on time, but we can solve the technology problem so you won’t ever be late to a meeting because of the tech.

I always presumed the need for that experience would drive this business into Microsoft’s lap given people live in their office applications.

In fact, that’s what a lot of people told me in the beginning. But three years ago my belief was email was going to go away and be largely replaced by messaging. By the way, I’m a total nerd. I have hardware in my office and I still write code on the weekends. I’m constantly downloading the latest consumer chat applications. I’ve been deep on this stuff forever. I just love doing it. And three years ago I was already moving off of email and communicating with all of my friends using messaging.

I’ve seen that with my son, who is 25. He doesn’t use email at all. He uses iMessage or SMS, web chat, etc. My belief three years ago when I came into this business was that’s the future. Messaging is going to replace email because it’s way better for team-based communication, for fast, short, informal communication. Email sucks and messaging is better.

Cisco, of course, had Jabber. When I looked at Jabber I said, “That’s just like AOL Instant Messenger from 20 years ago. That’s not the future. The future is going to be mobile based short messaging that’s like SMS on steroids.” That’s what the future is going to be. So the strategy was, “We’ll own the messaging space for business.” That’s what we built with Cisco Spark. You can download it in the app store today. It’s a messaging app built for business.

We started building it and of course, six months later, Slack came out and I think the rest is history. Over the last two years it’s been shown that that’s the direction of business communications. We now have one of the leading messaging apps for business in the world. We have probably the most secure messaging app for business.

I was going to ask about Slack. Why do you think it has done so well?

One, they really understood the importance of a team. You have to be invited to a team. When you do that, it eliminates all of the spam because it’s an invite-only thing. If you don’t want to know anything about that team anymore, you leave and you don’t get any of the messages. Nobody had done that before and it eliminated a lot of traffic. That’s number one.

Number two, they built an open platform right out of the gate and they went off and got a whole bunch of integrations so they could tie business-critical systems to it. The third thing is they found a beachhead in the development community in Silicon Valley. I think those three things, coupled with the design sensibility that Stewart Butterfield brought to the picture, they got a bunch of stuff right.

We have the same idea with teams. In fact, when you look in Cisco Spark you’ll see we have team-based communications. But the long game for us is, messaging leads to voice and video, which is our real differentiation. We’re a network company, and the reason why we’re in voice and video in the first place is those really need a great network. While it’s quite easy using modern technology to build a Salesforce.com, for example, it’s very hard to build a real-time communications network that is incredibly responsive and has great quality.

Our strategy is, let’s build an incredible, real-time communications platform with an amazing messaging application on the front because they go hand in hand. You start with messaging but pretty quickly you go, “Can we just have a quick chat?” At that point you want a frictionless way to get in touch with that person or persons with a voice or video call.

With all the other messaging platforms you had to say, “Let me call you. What’s your number?” A whole interchange would happen in messaging to figure out how to connect people in real time. Our vision is, if we’re in a messaging thread and we decide we want to have a real-time conversation, we tap one button and it just goes live. That’s what we built in Spark. Nobody had done that before.

Along the way we built a great messaging application. In fact, it’s transformed Cisco. We have 50,000 people at Cisco using it every day instead of email. My email is down from around 500 per day to about 20 emails a day.

We were right about the business messaging thing and we have over a million paid users now for our messaging application. We’re really starting to transform it and we can play outside of the Microsoft pen. Microsoft doesn’t have a messaging application like that. There are very few of them in the world actually. Spark is one. Slack is another. HipChat is another. The rest of them are startups. None of the big guys except for Cisco have an incredible business oriented messaging platform.

OK, let’s turn to your IoT responsibilities and the company’s vision there. So, leadership saw the success you had with collaboration and decided to reward you by giving you a whole set of unrelated technology?

With the Collaboration business swinging to success and the transition of our CEO, the conversation was, “OK, we need our next generation of leaders to step up and help the future of the company. This whole IoT thing is a new space and ripe for innovation, and you now have a reputation as a lead innovator in the company.”

Of course, it’s not me. It’s my teams. I’m the drill major. I create teams that can innovate and inspire people by setting the vision. And IoT is incredibly interesting to me; connecting all the things in the world, and Cisco is in a great position because we’re the connecting company. The next generation of the internet is going to be totally different to handle an order of magnitude more things and, more importantly, diverse kinds of things.

This is a pivotal turning point. The ships that got us to the new world are not going to get us to the world that’s beyond. Now we need to build rocket ships to take us to that next world of the internet. Cisco can be part of that and we want to drive it. That’s been my new goal, to do that.

Connectivity is one thing, but the people I’ve talked to that are trying to leverage IoT, in the utility business, for instance, say the real problem is correlating the data and making sense of it. Isn’t the opportunity going to fall to the people that are doing the correlation and making sense of the data?

Exactly. That is actually the essence of my strategy. In order to maximize our opportunity, we can no longer think about ourselves as just a connectivity business. We need to solve the full stack of problems. The way you do that is to solve the business need. As a part of my strategy, we’re building out new business units.

We built a connected car business unit, and I’m just about to announce a leader for that. He’s saying, “The idea is to build a full stack of offers, not just connectivity. It’s not, ‘Let’s go sell a wireless modem to Ford.’ Its, ‘Let’s build a total end-to-end solution for Ford and everyone else that lets them deliver services to their customer, lets them collect telemetry data, etc.’” In other words, we have to move up the stack.

My strategy is, we’re building vertical business units who are building applications and the full stack of offers that just happen to include connectivity.

So you’ll do that vertical by vertical?

Absolutely. The trick is to leverage the horizontal technology as best you can in order to get good margins. At the end of the day, a great business comes from solving customers’ needs better than anyone else. We’re focused on where the money is, then we drag along networking behind it.

Is that to say you have platforms in each of these verticals?

We have a platform we’ve defined and scoped and we’re basically skinning it for each vertical. We’ve taken something that’s common across the first three or four we want to do, and we’re adding capabilities for the verticals and then skinning it for that industry and building a go-to-market for that industry that’s very specific.

It’s early days so a lot of this is speculative, candidly, but the key beyond the technology approach is how you do it, and that’s really where it’s all about iterating quickly and testing lots of ideas.

I’m building this team in a way that is like, let’s go test 50 ideas and we know that 45 of them are going to fail, five of them might work. We’ll take those five to the customers and, out of those five, maybe one hits. The design of the team is all about build fast, test a lot of things, move very, very quickly and find the nuggets. This whole transformation is so big that I think most people get lost. They’re trying to solve too many things. It’s too confusing. You could do everything. Everywhere you look there’s opportunity, but most of it is false. Most of it won’t turn into scaled, multibillion dollar businesses.

My view is, don’t get distracted by all the shiny object chasing that goes on. Try and have a system and a process that lets you hone in on the things that are really going to scale and then be almost maniacal about lopping off the things that aren’t working because they’re all going to be business someday, but not today. What are the ones that are going to be businesses next week? That’s the only way to drive success. We will acquire companies, but I’m a software developer. I want to build stuff. It’s way better if we can do it internally.

I imagine there are pockets of IoT all around the company. Did you centralize that?

We collected most of it. We reorganized and we moved most of the stuff into my group. All the one-off stuff that was happening, yeah, it was all moved over into my team. It took lots and lots of different initiatives. It’s a very diverse team.

How big are the two respective teams, at this point?

We have 4,000 to 5,000 engineers in the collaboration team. On IoT it’s still relatively nascent, so we don’t publish the numbers. It’s early days, but hundreds of people.

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